Banks Get Better at Hiding Charges

Overdraft fees that banks launched in recent years with little notice to consumers have not gone away despite efforts by consumer groups and regulators to end a practice that generated billions in fees from unwitting customers.

Instead, two new studies show, banks are charging more, hiding the fees deeper than ever and making it difficult to have charges reversed.

Fees in the latest year totaled $29 billion, according to Moebs Services. And the charges are rising again without customers' awareness, said the advocates.

Notice of pending charges are buried in bank account consumer disclosures that average 69 pages, said Pew Health Group in areport released Friday. For consumers who complain, the banks require “binding arbitration” through industry channels, not independent regulators, a practice that Pew said discourages customers from being reimbursed.

“Consumers are expected to wade through long, confusing documents and may be subject to steep, unexpected fees,” said Pew project director Susan Weinstock.

The Pew Charitable Trusts unit tracked two dozen large banks and found their practices are “still risky” and misleading to consumers. The report gives consumers no specific advice on how to avoid the deception, but said the newConsumer Financial Protection Bureaushould find solutions as part of a probe of the fees it launched in February.

Major banks went on the defensive two years ago when consumer groups reported the financial firms were collecting tens of billions of dollars in overdraft charges. Some fees came from "robo-charges” automatically assessed to debit accounts to protect against still more charges for bounced checks. California’s attorney general brought a suit against Wells Fargo and cited casesin which “one overdraft into as many as ten overdrafts.”

Consumer agencies forced Wells Fargo, TD Bank and others to make payments to customers over hidden charges andchange practices. At the time, banks were already under fire for misleading practices in the collapse of the mortgage market. Studies showed overall bank charges were as high as $40 billion, and some saw a desperate attempt by banks to make up for massive loan losses and loss of income as proprietary trading restrictions hit.